Extremes

Kevin is 58, lean and fit, experienced and sharp. “Top of my game,” he says. So it’s hard to be punted, especially as v-p of a health care company. That was two weeks ago, and he still puts a suit on and heads out the door each morning. I doubt he’s told Wendy yet.

Don’t know about you, but in my circle the number of people being kicked to the curb is little short of remarkable. Especially four years into a recovery.

On Thursday Alison Redford did something she’d never imagined when vaulting to premier of Alberta. Her budget has a $2 billion hole, cuts government spending, tosses election promises overboard and ushers in times of austerity. Resource revenues have plunged 47%. “It’s going to be painful for a lot of folks,” the finance minister said, swiftly.

Days ago in Ottawa F summoned the reporters to talk about the latest stats on the economy. “I will have to account for this in our budget projections,” he said, “and the revenue projections.” That means you can kiss off any hope of a balanced budget in the next few years. More red ink instead, and job cuts in the NCC.

Just what you’d expect with the economy softening faster than Rob Ford’s tummy. The latest GDP numbers suck. The economy is growing at a Lilliputian 0.6% and in December actually shrunk. Compared to the good old days in 2011, when growth was four times higher, it’s little wonder the dollar has careened lower and the Toronto stock market is a serious laggard. As I mentioned some days ago, inflation at half a per cent is not even in the Bank of Canada’s comfort zone of 1% to 3%, which makes some people (like me) worry about deflation.

Speaking of the central bank, let’s talk interest rates for a moment. For the past 30 months the bank has sweated about horny house buyers, bloated lines of credit and bankers who never say no. Household debt soared to record levels, gassed by massive mortgages as home ownership climbed to an unprecedented 70%. The soon-to-be-departed Mark Carney warned repeatedly that rates might have to rise to squish the problem. But, instead, he let the elfin deity do it for him.

F’s killing of 30-year mortgages had the effect of raising rates by almost 1%. That was enough, and things sure have changed as a result. Borrowing levels have stabilized (but debt keeps rising), the currency has stumbled, growth has vanished and chatter of higher rates is gone. Oh yeah, and Kevin lost his job.

Said the central bank this week: “With continued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time.” Translation: interest rates are staying where they are because the current situation is freaking us out a little.

In practical terms, what this pathetic blog bleats about day after debilitating day is part of a much larger story. Sure, house sales crumbed last month by 29% in Vancouver, 15% in Toronto and 18% in Saskatoon, and prices are starting to follow. But add to this struggling retail sales, a miserable Christmas and big layoffs at stalwarts like Best Buy and Sears Canada, and the story deepens, especially with our aging and unprepared population.

Sustained low interest rates will keep millions of indebted people from blowing up, but they’re hardly good news. Mortgages at 2.99% will not rekindle flagging condo sales or rescue Victoria. After four years of cheapo money, it’s old. Another year or more of emergency rates simple means we still have one, as the economy loses its grip on growth and slides towards contraction.

This is why residential real estate is cooked.

But there’s more. If the economy’s anorexic, why are corporate profits obese? How can the stock market keep rising (at least the ones in the US and elsewhere) when the middle class is sucking air?

Simple. We’re moving more to the extremes. Big companies who got lean and efficient after the GFC face zero pressure for higher wages and salaries, since everyone’s just happy to have a job. Plus they, like you, can borrow money at dirt cheap rates, then write off the interest. More falls to the bottom line, keeping profitability robust even in questionable times.

Investors have reaped, while savers are raped. People with money to invest (the 1%) have had double-digit growth in the past year and close to that, on average, for the past three. Folks with money to buy stocks, ETFs, preferreds, REITs and other securities have enjoyed tax-advantaged returns while those stuck in the orange guy’s shorts collect dust for interest, then see it taxed away.

Anyone who listened to me years ago preaching about balance, diversity and liquidity knew enough to bail out of houses at their peak, trash debt while rates were in the ditch, and get ready. The US has turned into the phoenix I predicted, financial assets have trumped real ones and every crisis the doomers have gushed about on this blog since 2009 has proven illusory.

223 comments ↓

form day before…
#150 -Agents are needed to prevent lawsuits that FISBO’s get themselves into. It’s a small price to pay for that piece of mind. Commissions are actually quite low for the potential headaches prevented.

————————

Commissions are ridiculous for what is offered. Why should I pay $18,000 for some paperwork and opening some doors to a $400k house? The value of MLS via realtor is gone as you can do this for $200 more on a FSBO and get same exposure. More realtor scare tactics. I’ve done it, it isn’t scary. And just put a condition on your contract “subject to review by sellers lawyer” then you should be good assuming you have a good lawyer. And in the future you speak of there will be more FSBO, that is the trend, especially if prices decline and people want to hang onto every dollar they can.

I’m starting to see sales in the < $700,000 range in Lorne Park. 25 year old townhouses and nice houses on postage stamp sized lots. Have not quite figure it out whether it's a dead cat bounce in the spring here.

Below are the up-to-date current price to peak comparison for Greater Victoria, using the very reliable 3-month median to the end of February. This includes the average of the medians for December 2012, January 2013 and February 2013 compared to the average of the medians of the three peak months.

As this major correction plays out, realtors, real estate brokers, the real estate board, bankers and the media will all do their best to convince the public that the market is stable. This, of course, happened in the US when their housing bubble peaked in 2005 and started to correct. In mid 2006, Jerry Bowyer of the National Review Online wrote an article in which he said, “A housing slowdown will take place, and it will be orderly. No bubbles. No pops.” He also said, “Meanwhile median home prices are almost exactly where they were one year ago. All this is because the economic fundamentals that have been driving housing are still driving it.” At this point, the US housing market had corrected some, but the big price plops started to happen almost immediately after he wrote that. I think that this is exactly where the Canadian housing market is today.

It isn’t a good time to buy a house in Victoria right now. After prices fall significantly, there will be no need to rush out and buy, thinking that prices will be moving higher again quickly. That isn’t how major corrections work.

Toronto experienced a major real estate correction in the early 1990s. Once the market reached bottom, prices stayed within 5-10% of the bottom from 1992 until 1999.

The same can be said for the US cities that experienced the biggest price corrections. Once the bottom was reached, prices in Phoenix and Las Vegas remained within 5 – 10% of the bottom for 3 years, while prices in Los Angeles, Miami and San Diego remained near the bottom for 3.5 – 4years.

If you have been sitting on the sidelines waiting to buy for the last 3 – 4 years you should be very happy right now. We certainly are. You will be in control when the time is right to buy. Your responsible decision not to buy a property at bubble prices will pay off. We love renting and watching our bank account balances grow knowing that prices are declining in Victoria.

Still have to thank Garth for this blog which made me really think about hanging on to a rental. Barely cashflowing made at least some sense when house prices were rising every year but with the prospect of “subsidizing” a rental and possible price declines, risk is too high. I should have known better as I read 2015 and 2020 years ago. Greed.

Bank economists have repeatedly said they don’t see a slump in real estate happening until there is a catalyst. Unemployment is a pretty pervasive catalyst. One day Carney will learn that he only delayed the pain and by doing so, made it ultimately worse. Carney is to Canada’s prosperity as Al Gore is to the internet.

I’ve been reading your blog for about a year now. Thanks to you, I’ve pulled my money out of the orange guys shorts and am now investing. If interest rates don’t rise, then I guess the bond market is safe after all? Although I still have much learning to do, especially related to bonds, preferreds and REITs, I am trying and your blog helps me greatly. You are making a difference to people like me. So…thank you :)

I think you’ve been completally wrong about our intrerest rates.
You said that bond market would get rates higher but that is nowhere near to happening as our goverment is buying up their bonds.
Looks like will have rock bottom rates till at least the end of this dacade to keep our whore of a real estate marker afloat.
You need a vacation sir!

@ #7 “Thorhhill Master” You need to realize that Thornhill is an exception, standing apart from common Canadian real estate. Attractions include the Promenade Shopping Centre and the Scottish Cycle Museum (which TripAdvisor hails as “Cold and plain, but still worth a visit). Like London, Paris and New York, it commands high prices for a good reason. The world’s super-rich and ultra-powerful will always pay whatever it takes to live in Thornhill. Now, suck it up and BUY!!!

Freedom is not Money or Treasure you own, it is not having a gun and being free to walk the streets and do what ever you want.

SELF WORTH OPENS ALL DOORS

Most live in the matrix not cognisant in the slightest of their enslavement to fit in . As humans we look at history and the tragedies of the past. The Jones town massacre, here was a leader who had total control of his followers, he made them give the poison to the kids and drink the rest themselves.

When people worship anything but themselves they are in danger. They can easily be manipulated aggressively, or passively. You worship a god, a celebrity, a govt leader, an activist, a rock star, an Alex Jones or even an Alien. You are not free….You are owned by the machine, spin it all you want, if you are not the centre of your own universe, you are nothing………..

For true freedom is attitude and self-worth. YOU must come first before all else……..Why is this concept of super self love so looked down on by teachers, society , parents, and peers. They invented a word for it, Narcissist, but then again they invent words all the time so as to avoid debate, A (Critical Thinker) is now a Conspiracy Theorist.

They want you disarm you with a word because they have no weapons to fight someone like you.

They all swallowed cool aid, they live in the machines matrix.

They don’t know that another beautiful universe exists outside of it. They follow the rules and the script someone wrote for them. They are fearful of being judged and evaluated in a negative light, they will buy and do dumb things. They seek acceptance at all costs……..Real Estate, Beamers,etc

A free man does not seek acceptance,. he spits at it…

The most fantastic thing a human can do is walk up to a mirror, look at your refection and say. I am the best one in the world, no one is better than me, and if people don’t like the way you are, you consider them scum beneath your toe nails, not worthy of a fraction of a second of your time.

Freedom my friends is Love thy self before all else….and if some of you ever get there, not likely, you will know what freedom really is…….

Not saying you should yell profanities out at all the dumb track 6ers from track5 , be humble in public, but have a zillion megaton nuke bomb of pride inside. and always be ready to pounce on opportunities.

True Freedom is all about attitude. Look at me, I can’t write worth a shit, grammar, what grammar. Does it stop me expressing myself, do I hide that fact and cower in fear of being judged negatively . Hell No!! Not a chance. Nothing gives me a bigger thrill than when the schooled chirp me about it. They live in someone Else’s movie, play a character that’s not natural to them. In my world I write the script, produce the episodes, and am the lead actor in every scene….It’s my movie. and if you don’t like it tough shit.

When people say, Old Man, Beach Girl, and Smoking Man are the say they jump to that conclusion because they recognise we all share something in common, and its not a key board. We love our selves and are not afraid to show it.

If 70% of Canadians had every spare dollar tied up in the TSX, would you call that bubble behavior, what if more than 50% of all those hypothetical dollars were borrowed? Ah, better yet how about 95%? I would call that serious bubble behavior, and I don’t see any reason why that shouldn’t apply to housing.

Canadian house prices and debt levels sustaining them are so high, there is almost no money left to flow.

I made a lot of mistakes in my life, but signing on the dotted line for 500K (that in the end will likely suck a million out of me) on a property that is comparatively worth 100 to 150K is NOT one of them.

The USA has not turned into a phoenix as you predicted. Food stamp recipients are at an all-time high and the number of employed people is less than before the Millennium. The recent bounce in hirings is because Obamacare is applied to people who work 30 hours or more per week, so employers are reducing staff to part-timers and hiring more part-timers to make up the difference. Factories and warehouses now use very advanced robots instead of rehiring. Retail spending has fallen because of increased payroll taxes. For the true picture of the American economy, read financialsense.com, Mish Shedlock, or shadowstats.com.

What happened to our society that government has gotten to big. More and more wealth stripped away from wealth creators. leading to lower cap ex, and lower job creation, to be spent on useless government bs.

Then the things that do make money (oil) are stalled by a bunch of left coast losers, and environmental halfwits and a government that doesn’t have the balls to take charge and steer the ship on the pipeline issue.

I’m noticing more for rent signs as I ride around Victoria on my bike. I think that a lot of potential sellers will hold out for a correction and just maintain their interest payments with a renter. Too bad that a lot them won’t get even half their mortgage paid by renters at current rates. This may even drive rental prices down!

All the stock market hype is bringing back such good memories. Remember how the Canadian economy did so well when the Canadian dollar was worth about 65 cents U.S. and our American friends flooded into our country to buy property and swamped our manufacturers with orders because US money was worth so much more than Canadian. Keep your eye on the ball folks.

“As the country’s housing market weakens, one consequence could be a spike in condo lawsuits. When prices fall, pre-sale buyers are tempted to look for ways to get out of their deals-and that’s exactly what’s happening in British Columbia.
The province’s home prices have slid from their lofty peaks, and the courts have been sympathetic to pre-sale buyers, in part due to a strong piece of consumer-protection legislation known as the Real Estate Development Marketing Act (REDMA).

The law, passed in 2004, sets out extensive disclosure requirements for developers and allows buyers to reclaim their deposits if the builder hasn’t met all of the terms. In one case decided this year, five buyers were allowed to rescind contracts even after taking ownership of their units.”

Reading the comments about Thornhill is interesting as I was born and spent much of my life there until my parents sold both house and business to retire. Our house is still there. If they had held onto it and rented out as many advised it would be worth far more today. Even Anne Murray still lived near us back then (by today’s celeb standards it was quite modest but seemed bigger then). My memories of Thornhill are only shades of what it’s evolved into. Will have to go back this summer and take a tour.

Big companies who got lean and efficient after the GFC face zero pressure for higher wages and salaries, since everyone’s just happy to have a job. Plus they, like you, can borrow money at dirt cheap rates, then write off the interest. More falls to the bottom line, keeping profitability robust even in questionable times.

Garth, the “reason” for recessions is to give the society a reprieve to sit back and reassess. It is the motor of change and innovation. It’s sad that we need fear and pain to progress, but that has been forever, at every level, from cell to individual to population and so on. What “they” did was to curtail this process, apparently out of fear of the fear itself, through what basically is printing. And this is just like prescribing analgesics. It will not cure the illness, the illness will advance. They cannot bridge this abyss forever. We have to walk through the valley, no surrogate for that.

Prices slightly down in the 1.5 million dollar range and below. The two million plus are not bulging. Low interest rates are allowing people to hold on to these empty or barely furnished flips. I think we are finally nearing a turning point. When people drop their prices I’d say the price adjustment is about 10%. From 1.6 mill to 1.45 mill. Seems like prices have a long way to go still. Sitting, waiting and watching.

“The US has turned into the phoenix I predicted, financial assets have trumped real ones and every crisis the doomers have gushed about on this blog since 2009 has proven illusory.”
This will end up having the cred of your call for higher interest rates. You ignore the increase in food stamp use, the drop on GDP, the local governments going bankrupt etc. However, where you really fall down is in your ongoing inability to recognize that printing $85B per month to buy ones own debt is the reason for your US “phoenix”. It is doom Garth and I will never understand how a man of your intelligence and experience could not see what is happening.

I see it quite well. Life will go on as before, except a lot of people won’t enjoy it. But you know that. — Garth

And G….don’t forget that most corporations are getting an increasing amount of revenue from offshore investmenting…..so it doesn’t matter so much what Main Street Brampton is doing.

Tthis is a big beef the Obama administration is howling about…they can’t get US corps to repatriate the cash so that he and the demo-commies can gorge onthe largesse of someone elses labor.

This is what happens when taxes get too high…people and businesses take theit wallets elsewhere…in real estate parlance its called urban migration….in the boardroom its called common sense.

Extrapolate to the natural demographic and the youth of today will be booting the crap out of the union gougers in a very short time. While the unions may say now to the youth eat cake’……that will soon turn into rage and a big new direction in attitude by young people against the generation that tried to screw them with debt and taxes….while ripping them off by double dipping job hogging and pensions on top of the forcing of outrageous labor premiums such as the CPP rip on a generation that hasn’t had the opportunity to get started……

Youth resent this believe it or not and political change is right around the corner……civic pigs in the trough will get their fat greasy pensions yanked by the new wave of voters…wait and see.

And Kevin…if you’re still dependant on a job at 58…dude you’ve really been a bonehead.

I’m a renter with a 200k a year job, a very specialized masters degree and no debts, early 30’s and gunning for retirement in my 50’s. I have no plans on drastically changing my situation in the coming years, hopefully my experience and very essential and specialized niche won’t lead to change I haven’t planned for. I have a gf who trusts me to provide her with advice, so she won’t influence my decisions. That being said, I have a maxed out TFSA with a brokerage (minimal amount in HVU.tsx) and a growing amount of money doing nothing in savings.

As much as I see what you’re saying about how your advice was golden on the market, current circumstances make me wonder if the same is now true. Looking at the triple peak in the S&P 500 (now at the top of the third) I sit on the sidelines and eye the corrupt market maker with suspicion. This has all played out before and cost the retail investor every time, what makes this round any different? I’m a cynic, like most of your followers.

A better question, when fighting off the young ladies hounding you for love and advice, are you putting your own money on an extended bull run?

I’d like your point of view, since those who have listened to your blog and aren’t burdened by real estate need a new plan. I don’t want to work forever…

Early 30s, top 3% wage in population, no debt and no real estate bull trap around your leg. Congratulation.

But, are you single ?

Because, in general, a guy dont choose to rent or to buy. His girlfriend does. My bet is you will stay a happy renter as long as your girlfriend dont stick an ultimatum on your windshield : “Buy or bye” …

Very clever guys made very poor decisions lately following this universal pattern.

#24 Smoking Man on 03.07.13 at 10:30 pm
Re got crazy cause people are not free. Below is an explanation why.

Congratulations Smoking Man, you have learned to use spell check and put some semblance of grammar to good use. Hell I could actually comprehend what you were trying to convey. Freedom ! Freedom ! Live Free or Die!

1. I have yet to ever express my personal opinion on any topic on The Oracles Blog.

FYI, I ALWAYS copy, cut then paste a paragraph of an individuals opinion followed by the link…. Following the Great Ones theme is challenging yet amusing at times

2. Never imply that Im a doomer…
Maybe you should watch the video then comment…

3. The video was directed to Vlad..
however your entitled to an opinion…

4. Education is my objective of posting rather than promoting ones intellectual property…

5. Money is not evil, “greed” is the root of all evil…

6. Wealth “preservation” will determine the difference between who’s children become lords or slaves over the next 10 years.

7. When the storm does come, we fully intend to build our home on rock rather than sand..

King Solomon wrote…

A man to whom God gives money, wealth, and honour so that he has all his desires but God does not give him the power to have joy of it, and a strange man takes it. This is to no purpose and an evil disease.

In the meantime spend 6min of your life and watch this chart…
Then ask yourself if anything has changed since Solomons time…

Very true, and I agree. My question was more about timing to put my money to work. I will largely go overseas and South to avoid the laggard TSX, but the (US) F is king in global finance. So with QE and a tentative resurgence in the American economy, is your bet for a near term bounce, hard correction, or an extended bulk run like pre-2000? I want to buy low and avoid being the typical retail sucker. I work damn hard for my money and don’t want to hand it to the 1% of 1%!

I wouldn’t ask if I didn’t value your point of view… even if I don’t take your advice.

Lucky for me; I’ve got all of my investments in a U.S. investment account, in index ETFs. So as the Canadian dollar falls I’m not hurting by this.

The only problem is that I was hoping to start searching for a new job, and with the economy softening it doesn’t look like there will be all that much going on out there, other than Truck Driving jobs.

Actually, I believe Garth said that BoC’s prime rate would remain low, but that money would still pour out of bonds and into the equity markets, which would drive real mortgage rates higher.
Now, it’s true that the banks are now offering all-time low mortgage rates, but this is in response to unexpectedly slow growth and a seriously lagging economy. But to be fair, Garth has on numerous occasions over the past few weeks referenced economic data pointing to the fact that things are taking a turn for the worse, and admitted that it’s looking worse than even he expected.
So no, he does not need to apologize to you for taking his own time in order to try to keep you and the general populace up-to-date and informed about personal finances and economic indicators.
No one can predict every single turn and change; new economic data comes in every single day. Besides, that isn’t even what he is trying to. Unless you didn’t notice, he’s trying to give you general updates and guidelines that will help you avoid disaster and come out on top, as opposed to getting squished under the rubble.
So, if you are too cocksure to listen to him and take his advice, you could at least thank him for trying to save your #$%&*@.
But you probably won’t get it and will shovel everything you have into a house, just in time to watch prices free fall further and further into the sinking equity abyss.

2. ‘Full Monty’ (1997)
Male stripping gets a warm and fuzzy makeover in this box office sleeper. Six unemployed steel workers from Sheffield, England are inspired by Chippendale’s to strip for money and self-esteem. The film serves up a very different tone and style from Showgirls as it treats its characters with genuine compassion and actually tries to address some real social concerns of the English working class. The title is British slang for “the whole thing” or in this case going completely naked. The actors reportedly did a full frontal striptease for the 400 mostly female extras but in the film, the audience only see their naked bums.

Tonight my wife came home from her Pilates class. $55.00 per month. Two of the ladies asked if they could write post dated cheques for the month as they had no money in their accounts until payday. Wow. Both dressed better then my wife in their lululemon outfits. They are all in their 50’s, so no excuses for being young and broke. I’m glad we’re living within our means!

The Toronto firm I work for decided that it would be cheaper to unload an unprofitable segment of its business rather than look for cost efficiencies or try to build sales. So last November, 200 employees received notice that as of Jan 1st, 2013, they would be out of a job. The jobs were all high-paying technical and professional.

Just read on cbc.ca tonight that the TDSB will be laying off 248 school teachers starting the next school year.

With retail sales on the fritz and what appears to be a CDN recession on the horizon, why are REITs or real estate op companies a good move….???

Well-run REITs have quality properties with consistent tenants, steady cash flow, cheap debt and great distributions. — Garth
——————————————-
As a self confessed non paper investor, this is the only exception to the rule our family is making because of the income and it’s based on solid assets.

I read this blog everyday. I’m closing on two properties next week in hamilton. one is on the mountain, 335,000. I’ll cash flow a few hundred bucks a month here. The other, 275K just south of Gage park.. cash flow 700 a month. both properties with 20% down. probably going to get my third in a month or two. i dont see any type of correction happening around there.. and wtf is 10-15% decrease on these little houses that i’m cash flowing every month? i’ll be hanging on to them for 10-20 years. im 27 and i want to collect cash flowing properties in hamilton

The only thing keeping this boat afloat is the extraordinary measures by the CB’s to float the banks and the markets by every method possible.
This has penalized the wrong people for making the right decisions and rewarded the Banks and the Markets for making the wrong ones.
It’s taken 4 trillion dollars worth of Fed balance sheet bloating and a 16 trillion dollar US deficit and all they can show for it is a 1.5-2% GDP value.
Hell let’s just all quit our jobs and invest all our money in the markets, they only go up. With an annualized return of 10-12% a couple three hundred invested will give you income above the poverty level.
Where have I heard that before, oh yes house prices.

Markets are based on corporate earnings, which are rising along with sales. This will continue long after the Fed removes monetary stimulus. Yes, of course you should invest, but not “in the markets”. Read some prior posts for knowledge on how to depart the ranks of the whiners. — Garth

Yup, don’t brother shipping it to eastern Canada, refining and selling to the US and Europe, nope, just believe the video that depicts oil tankers traveling down the BC coast in CALM waters. Not a lake but a fracking ocean that can be turbulent in the best of times.

Go buy another house and pollute your own backyard. Time for some forward thinking.

The collapse of the housing bubble and the stock market pushed home equity as a percentage of net worth to new lows. The subsequent doubling in the stock market has had little effect on the bottom 90% of households, as the top 10% of households own 85% to 90% of all stocks

Deflation from all corners….demographic, too many labours, and not enough demand. Any upwards interest rate move will start the deflationary spiral, fast or slow, its going to happen. Residental RE is toast in canada. Large corporation that have global exposure will do well. Excellent post again, very grateful!

-
“Houses will fall. Jobs will go. So it’s hard to be punted, especially as v-p of a health care company. I doubt he’s told Wendy yet. Kevin’ll stay unemployed. Don’t know about you, but in my circle the number of people being kicked to the curb is little short of remarkable. But who said anything’s fair?” — Life’s a bitch and then you die. But hell, let’s get this party started for the short time we have left down here! We’re all going to have ups and downs, life is not supposed to be perfect.
—
#4 Cash-is-King? — “What happened to the society? It’s really sad…” — Lotsa cycles ending (new ones replacing them), or coming to an end (Mayans, Incans, Aztecs, Caucasian race etc.), plus constant change is necessary down here.

Yes, it’s sad IF one gets caught up in it. I don’t place too much attention on things I can’t do anything about, as I would rather focus on bettering myself while I’m still here.

#7 and #10 thornhill master — Best response is from #12 Calgaryboomer — “Still have to thank Garth for this blog which made me really think about hanging on to a rental.” — Turn savings to investments, have monthly investment returns pay rent and use TFSAs to increase wealth, not RRSPs — they’re a tax time-bomb.

#24 Smoking Man — “. . . A (Critical Thinker) is now a Conspiracy Theorist.” — Well, at least I have a better understanding of who I am!

This Is My Story,
Long time reader, first time poster.
Nine years ago I convinced my wife to sell our home as I needed to downsize due to a job change and a small business that I was working on. Almost to the day interest rates started to drop and house prices went up. What we sold our nice big home for couldn’t even buy a B.C. box. We have been renting ever since waiting for the market to change.Well over the years our landlords have sold making good money and we have had to move and costing money each time. Well the market has finally started to turn and our landlord has just informed us that he must sell due to family matters.(we were promised at least two years and we haven’t even been here for one year). My wife and I are not impressed as we have to move yet again if the house sells. Also we will have to endure showings and all that goes along with it. I have been following the market daily and she is trusting my gut feeling but this may be the last straw. We have started to look at lots so that I can give her the house that she wants, (I have alot of contacts but have not built a home before). My wife is a stay at home wife and has a small business that brings in about $20,000 per year and I work two jobs that net me $65,000. My two small business that we started make about $100,000 and they pretty much run on their own. (I’m not kidding, I work at least 12-14 hours aday and catch up on the weekends).
We can’t take much more of this, if we buy now I know we’ll lose money and if I build a home it just might kill me. (i’m 51 and getting tired)

We appreciate your feedback. We’ve been listening to our customers who want to lock in for the long term and we are incenting them to make better financial decisions by offering a great rate on our low-rate mortgage.

Our low-rate mortgage is perfectly brand aligned for us and is also aligned with OSFI and Ministry of Finance objectives to help Canadians reduce their household debt. The 5 year fixed rate minimizes the risk of interest rates rising for our customers and the shorter amortization period results in faster
repayment and less interest cost over the life of the mortgage.

Our low-rate mortgage is about encouraging customers
to make responsible home financing decisions.

Some party on the S&P500!!! Some friends have sold thinking correction coming at some point. US banks will raise dividends and buy shares, keep the rally going. Funny, Ally will be the one that won’t. How many Canucks fell for their ads. We’re so gullible.

Amazing post for this present time Garth. A wealth of information available to anyone reading it carefully. The wisdom of having: “balance, liquidity, and diversity”, which is what I see as the central theme of your blog, becomes increasingly obvious as each day passes.

I read recently that one can beat a fool half to death, but they will still be a fool. No cure.

….the downturn in housing prices spreads – it is now affecting both real and fake houses.(sic)

The Province newspaper gets called out and comes clean, sort of. Apparently the Calgary Herald, Montreal Gazette and a few others share the same stories and just change their on-line header….who would have known?!?

John I have been following the Squamish real estate market daily for about 15 years and have been plotting data on excel for about 6 months. I only have listings at 379. I only have access to the public data on mls. John where are you getting your data for listings at 436?

It’s late and I don’t have the energy to post on the situation in Squamish but John is right about the lack of sales here. There is a large overhang of overpriced high end listings. When the sellers get serious about moving them, look out below.

The US housing market is experiencing the largest “dead cat bounce”. Especially now when higher US interest rates are around the corner. I personally expect US rates to (dramatically) increase in the second half of 2013.
To understand why rates are bound to rise, one has to look at the (dramatically) deteriorated financial internals of the US since 2007.

8 thornhill master – Don’t waster your money on such an ugly house. I have checked mls.ca and there are at least a couple dozen houses and apartments available to rent within a couple of blocks of this place, and the rents are reasonable compared to the carrying costs on this place. If you really have to live in a house just like this (why?) you will be able to pick it up for 300k in five years.

Re Kevin, this is exactly what i have been saying. All this new advice from financial experts not to retire till you are 70 or 75 – there are no jobs for this age group. I really wonder what planet some of these advisors are on!!

Right off to Heathrow to leave the Spring in the South of England for the arctic blasts of TO.

Why can’t Garth admit he was wrong about interest rates? Many people including myself have been saying interest rates have to stay LOW otherwise the banks will collapse as well as Canadian real estate. That there is NO recovery going on, only propaganda.

The reason why the DOW is at 14000 and above is not because corporations are growing, but in fact more of a reflection of inflation not corporate growth or any kind of job growth. Its just common sense if they were growing they would be hiring, but they aren’t.

Also what is this nonsense logic that inflation below 1% is a bad thing? First off it is NOT less than 1%, anybody that does there own grocery shopping knows its a lot more than half a percent. This is another government LIE. The Canadian dollar is falling in value right now, below parity with the US, not because Canada is getting weak but because confidence in US is strong in comparison to Europe and Japan. I hope its enough for these so called expert economist so they don’t have to result in printing more of our currency and creating more inflation destroying the average Canadians purchasing power.

Anyways don’t trust politicians with your money, save in hard assets and get out of debt. I would also recommend people listen to real economists like Marc Faber, Jim Rogers, Peter Schiff, and other free market austrian economists for better financial advice thats avialable for free on the internet.
I was going to respond, but got tired thinking about it. Rates will stay low until they rise, which will be concurrent with more growth. It will come, and no 2008 will re-occur because of real and sustained corporate profitability and central bank coordination. No conspiracy, dude. No need to rush in the Austrian Plunge Team. This is evolution. Adapt or bitch. — Garth

Should you invest in real estate? Is it a tale of two countries when it comes to housing? We’ve seen weakness in Canada but signs of strength in the U.S. Where is the housing market going in Canada and the U.S.? How does sequestration fit into the picture? Craig Alexander, Chief Economist, TD Bank Group discusses this and more.

With so many listings, how to go about making offers?
10% less, 15% than asking?

I had witnessed this toxic seller’ group think once before in Florida where sellers in an entire location all asserted that their houses were just as valuable as the next guys listing. (2007) In 2010 when I actually bought, buyers were now feasting on foreclosures and fire sales at fractions of the price.

What Kevin found out is that 60 is -not- the new 40, or the new 50 for that matter. It’s the new 60. While he feels he is on top of his game, in reality , he no longer is. That’s what a head hunter told me. The headhunter also noted that placement agencies tend to be seas of grey hair.
Kevin needs to find a new game, one where his age will be an asset, not a liability.

You’ve heard the saying: “Buy low, sell high.”
You sold low and are now looking to buy high?
At 51, I’m sure you are smart enough not to do this.

With an income of $100k, I’m sure you can find a really nice rental place. But it’s not pleasant being booted out of a rental when it has been sold. What to do?

Here’s a tip: Do some research, find a landlord who has a good solid job and who has bought the house recently. Make sure that the mortgage is high ratio-a 5% down payment on purchase within the last year is ideal. (You can find this info at city hall.)

That owner will be firmly under water as prices fall, if it isn’t already. The owner won’t want to sell, maybe even can’t afford to sell when the mortgage is more than the house is worth. He’ll happily rent to you for years. Meanwhile you can watch prices fall, and perhaps in five years you’ll even buy the same house from the bank for a fraction of what it would sell for today!

Given the basel III conversion rules, arn’t a few of the bank preferreds becoming a tiny bit overvalued? The perpetuals, for example, look like excellent targets for redemption in a few years. This would have the effect of reducing the overall rate of return for anyone who buys at these prices.

@ #26 DaleFromCalgary on 03.07.13 at 10:35 pm
” The USA has not turned into a phoenix as you predicted. Food stamp recipients are at an all-time high and the number of employed people is less than before the Millennium.”

You are confusing corporate profits with health of the citizens & government debt. Eventually the consumer & gov’t debt will matter…but right now they don’t.

#58 & #73
I fail to see how either of you or anyone could find a conspiracy in the video I posted. It is an inevitability in a free market economy income inequality will happen without Governement intervention. Free markets always do and always will favour those with more wealth. They also favour those who have liquidity.
The much talked about middle class is a product of such Government intervention and as we live in a democracy, entitlements.You cna’t get elected unless you promise people they can have everything for dick. This has been bastardized by the blood sucking taking up air boomers who are, as Mr. Turner points out on a regular basis setting up future generations-if they are not liquid, for a whole lotta hurt.
The simple fact is regardless of what one reads on the innernets, most people do not have anywhere near the liquid assets they purport to have or think they have. They have at best an illiquid asset in the form of their primary residence-which is NOT nor was it ever supposed to be considered an ‘investment’.
Too many folks focus on Mr. Turner and his doom & gloom on the housing market. I happen to agree with that but he also, on a sickening basis, advises to get the hell out of your overvalued illiquid assett while the getting is good, take, in most cases, a stupidly high tax free gain and make some money with it. While not easy, it’s doable but as the video shows, most people have squat but more impotantly they think they’re in great shape. Of course if you can’t be delusional about yourself, who will be? At this point in time, it may be getting late, one can harvest the gains that the housing bubble has created and start to create a solid foudation to avoid the inevitability of the correction that any free market system asset will garner.
Now if you want to buy precios metals and live in a bunker (I wouldn’t) , that’s cool but 1st you need the useless folding money many of you so despise to buy the crap. How the hell are you going to know where you’re going if you don’t truly know where you are?

Personally, I believe, and have for years, that if rates are kept low, amortization periods should be lower. If you want to get people off the debt binge, make it difficult to afford payments. I know amortization has been lowered to 25 years, but I think they should keep rates low, and lower the amortization period to 20 years only for new home buyers (buyers who currently own and don’t move are exempt). This would help family finances, keep rates low, and have the effect of rising rates. People would actually benefit from lower rates by paying their mortgage off sooner, and qualifying to borrow would be tougher. They should have done this years ago in my opinion. If you think this is tough on people, remember that amortizations have always been 25 years, with rates around 6-8% previous to the financial crisis.

McLovin #78 – I’m hoping for a blog post about it, last I looked nobody is paying Garth directly for his diligent work on this blog. Maybe a good topic on a snow day, when realtors are at home with their Garth voodoo dolls rather than cooking numbers.

If you read above that post, you’ll see I’m no dummy. I wouldn’t pay (at this point in my life) someone to tell me that there is no such thing as a crystal ball. My guess is a correction on sentiment and then continued corporate profits and money flowing from QE, at least in the short term. Well researched and just as good as anyone else’s soothsaying…

Ok, maybe Kevin has no skills, so how about a job as a swamper? We can’t them either. They are the guys that hook up loads on the cranes. Pay is $35/hr plus pension and benefits so you’d think we could find them eh? Nope!

How about it Kevin? To qualify you need to show up on time, sober with a half decent work ethic, just half decent, that’s it. Oh, I should tell you you have to chase crane hooks through mud slush and snow except in summer when you can do it in 30 degree heat. You up for it? I didn’t think so.

Very happy with my 3 multi-familly rental properties: all with good positive cash flow. I’m about to renew the mortgage on one of them with an interest rate lower than the one I got in 2009! More cash flow!

Thanks for your input.I was always told to sell your house first then you would have leverage when you went to buy the next one.(never get stuck with two homes). As for your next suggestion to rent in a nice area from a landlord that has alot of money in the game, we did that too. But now he says he must sell do to his parents going into a home and he must help out. He phoned us last night to say that the they would be around Monday to take pictures and than list the home. He basicly begged us to buy the house but this one is good for renting but not our style as we have no storage for the toys we own. (paid for in cash). The landlord told me that they are losing alot of money on the place but they must sell. The stress of balancing the two jobs and running the two businesses and now this I feel we can’t hold on much longer. But it might be also a blessing as we will now have a front row seat to this realestate mess.
Garth I can’t thank-you enough for all the time you put into this blog. I can relate to to the amount of hours a person must commit to something he believes in.

Wifes been wanting to buy a townhouse in oshawa for a year now since we sold our last house to downsize.Im more than fine with renting as im enjoying the freedom it gives us,her not so much.I have to say that we have been following sales on mls and in the price range of 250,000 and under in good condition they have been selling as fast as they come on the market,this is oshawa,just cant fiqure out whats happening in this city.

Wow, there sure has been a lot of negative sentiment on this blog lately. But today there’s good news for the doomers! Sprott Inc. (TSX: SII) (“Sprott” or the “Company”) today announced it will seed and launch a new fund for carrying out an undertaking of great advantage, but nobody to know what it is.

That’s right, permabears. Sprott is setting up another meat grinder that you can stick your arm into for as long as you want.

0 Bailing in BC on 03.08.13 at 3:43 am
Uwinsome
#57 John Prine on 03.07.13 at 1:26 am

John I have been following the Squamish real estate market daily for about 15 years and have been plotting data on excel for about 6 months. I only have listings at 379. I only have access to the public data on mls. John where are you getting your data for listings at 436?

These are from Vancouver real estate board and include all rural areas such as Brackendale as well as town and were spot on yesterday.

Garth;
I’m probably missing something in the translation here, are you telling me this guy Kevin has been out of a job for 2 weeks and hasn’t told his wife yet? It seems to me the person you’ve chosen to spend the rest of your life with should be among the first to know of something like that, so you can get on with the job of dealing with it.

@DonDWest, post #46:
The government bails people out of losing stock you say? You better break the news to former shareholders of companies that went under like Enron, Bramalea, or Canada 3000 Airlines so they can be reimbursed by the government for their capital losses. I thought (obviously wrongly) that the best you could do is write off losses against past or future capital gains.

I check the MREA web site for my statistics. They haven’t released February 2013 yet, and I’m very interested to see what it’ll look like. Over the past five years, the numbers have steadily improved. I’m perplexed as to why that’s happened. I look out my parents’ balcony in Bridgwater Forest, and it’s open land as far as the eye can see… and yet small, plain lots are selling for $130,000 or more?? Insanity.

“…while those stuck in the orange guy’s shorts collect dust for interest, then see it taxed away.”

************************

This had me wondering yesterday when I drove my neighbour over to H&R Block to pick up her completed income tax forms…and then to her bank to pay tax owing. She was so eager to get this done….now. Instead of April 30th at precisely midnight. LOL

WHY was she paying so much income tax? I’ll never know, but it’s PROBABLY because she’s got all her money tied up in ‘the orange guys shorts’…..

#1 Calgaryboomer: “Commissions are ridiculous for what is offered. Why should I pay $18,000 for some paperwork and opening some doors….”

**********************

Agree! A number of years ago, the house next door to mine went on the market. All the listing agent had to do was make a phone call….to a prospective buyer waiting in the wings, to buy a house with our creek running thru. I still find that unfair.

In 1994 there was no work in construction so I took a job driving truck and was in Grand Bend, Ontario loading rutabagas for New York. I noticed that the guys loading the truck were all black from Jamaica and I asked the farmer and only other white guy there why Canadians weren’t there. He told me he could not get a Canadian to do that job, they won’t work!

It’s true to this day on farms across the country. In Leamington, Ontario there are so many Mexicans there that the Mexican government opened a consular office, in Leamington!

I can’t believe it when I hear people in this country say they can’t find work in Canada where jobs grow on trees. Is Kevin qualified to pick a cucumber? I guess not, I’ll call the Mexicans for more help.

Disagree, he is correct that corporate sales growth and profitability are in place.

What is morally wrong ofcourse is that corporations are allowed to produce in cheap overseas labor markets while selling in N. America and forever putting pressure on wages of workers, layoffs, firings —-(except the Sr. Management Executive Cadre, that makes out like bandits). No corporation should be allowed to have it both ways, but this happens because the Governments have long since failed to represent the people (actually sheeple) and only represent special interest lobbies.

The sheeple refuse to do anything about it, instead of pressurizing worthless politicians to make this illegal. We are told that manufacturing is returning, but that’s a tiny blip of resurgence. The reality is that corporations remain on a gravy train of outsourcing, tax evasion and large sales and they will continue to do so until the sheeple wake up to it. Ofcourse the sheeple are not entirely blameless, in their consumerist debt ridden culture either.

Across the pond, it seems the Swiss people have had enough of the degenerate fat cat culture and their superior democratic system is now kicking in and demanding change with some limits of pay packages amid growing inequality.

#127 Daisy Mae – I will tell you why, as it is because she is going to H&R Block. A friend showed me his tax return from there, as he had been going there for years and what a mess. One example: I said where is your disability tax deduction, and he had no idea about it all, and said they never asked about that one. :)

Low Interest rates are pumping up the stock market and
Suppressing the bond market. I see a stock bubble too. I
Agree housing is in for a rough ride but so too is the stock market.

If interest rates never rise or go even lower there will be a rise in stocks and a soft landing for housing and possibly a bond bubble pop.

If inflation takes hold and interest rates need to rise get ready to sell your stocks. Personally I’m playing it safe just bought a 5 year GIC for 3.10 at ICICI bank. I figure I’m still making more money than the bank on mortgages right now and ill be able to sleep at night.

Another problem I see with stocks is the human error factor. A house just sits there. Companies go bust all the time. Also emotion. Google is trading way higher than apple right now based purely on emotional feelings . Might as well take your money to the track.

A 5-year GIC? And you’re giving us stock market advice? What a player. — Garth

#70 mikee- the only cash that gonna be flowing is out of your bank account when you need to renew the mortgage at a higher rate, and get a problem tenant. Son. Buying investment properties in Canada today is a loosing proposition, but you will find that out in due time. Happy humping.

Taxation and Investment Advisor: For those that cannot do such themselves which is most of you all, please do it especially if you have an Estate over $1 million. The cost is minimal and the savings alone can pay dividends, and save you money, as there is all old saying you get what you pay for, and stay away from those who are know nothings. Those that are not qualified can cost you dearly in the end.

A caution for financially illiterate investors re preferred shares. Bank pref shares do not yield 5.0% just because the stated coupon at issue was equal to 5.0%. You need to a) calculate the yield to call for each series, based on the current price and remaining fixed dividends until the next call period, and for shorter dated call periods yields are negative. E.g. if you buy a pref share at $26.85, and it is called in 5 qtrs at $25.00 (being par), the $1.85 over par you paid is barely recouped by dividends received, it at all. You then need to b) price the instruments on effective yield to next call dates, based on the new reset fixed coupon over the 5 year gov rate rate. You also need to make an assessment over which pref shares are likely to be called. If banks can issue new pref shares at lower rates than those issued in the depths of 2009, they will logically call the expensive pref share, and issue a new pref share paying lower dividends or spreads over the 5 year rate. If you pay over par for the high div pref shares and they are redeemed early you may face a net capital LOSS. Pref share investment requires some knowledge and skill. Get a good advisor, e.g. one who can provide you a table of yield to maturities for all bank pref shares and can calculate it on paper for you in front of your eyes without having to look anything up, or at least read every word in the prospectus and calculate the yields yourself. Good luck investing.

There it is, Garth. The sweat, wet spot of Doom. Nothing more demoralising then a high fly, 50+ year old, executive cut loose into the raging sea of despair. Nailed it, my man. I know of a guy, don’t worry about which industry, that got let go last year that has started his own “consulting” business and it sucks. He was living the high life and now he’s burning through his savings. He’s only 51 and he will never get another job. Too qualified to serve coffee but no one will hire him at the salary he had.

#134 The Real Kip – I gotta reply to your post, my great uncle had a fruit farm down on Niagara on the Lake – 10 acres of the best apples, pears, peaches you could imagine.

As a kid – my parents always wanted to send me off to the farm to “get my hands dirty” and learn the value of working for a dollar – my great uncle refused – there is a ton of chemicals on the fruit and constant exposure was linked to many cancers.

My great uncle sadly died a few years back with liver cancer & lung cancer. What you see is not exactly what you get –

Those who live in the Niagara region are very careful of outdoor exposure during crop spraying time –

Today, a team of neuroscientists claim to have boosted the learning rate and memory of mice by grafting fetal human brain cells onto their brains. This particular hack has cast the net a little further, and gives us a unique insight into how brains work, and how we might soon be able to build superbrains.

Just laughing. If I was young today, would I just smoke a bong or go to work at the Dollar Store. I actually got educated, you would never notice. I owned a company then. I worked. Different kind of hard. Employees hate you as they are doing the grunt work. Well, who got you this grunt work to do. That did not help. Did that shit for 25 years.

When there is absolutely no hope, why bother. I would not. I watched some prick offering you mortgages for 10 years at 3.99 per cent.

Interesting post on a day when the Canadian economy prints +50k in jobs…

Sorry but I have disagree that F or the Bank of Canada will stand idle while the economy tanks… Rates will fall if this thing goes pear shaped and if it gets bad enough you may even see mortgage rules relaxed… All depends on how weak you can get the currency and what that does to the economy.

Garth, you say that money is moving from hard assets to financial ones. Can you explain why, maybe as a future topic? Is it simply because the money has to go somewhere and interest rates are too low for anything but borrowing to buy higher yielding financial assets?

I guess I do worry when I see the triple peak on the long term S&P chart, looks just like 2007, looks closer to a top than a great time to jump in. I don’t think it will go down like 2009 as that was a unique situation, but I can see it going halfway. Not to say it wont shoot past the previous highs for a while to really suck everyone in because they will all be thinking like me looking at that ugly chart. So as much as I like your advice, shouldn’t we wait for the inevitable correction, just as house buyers should? I mean, let it correct say 10-15%, then jump in?

#70mikee on 03.08.13 at 1:16 am
I read this blog everyday. I’m closing on two properties next week in hamilton. one is on the mountain, 335,000. I’ll cash flow a few hundred bucks a month here. The other, 275K just south of Gage park.. cash flow 700 a month. both properties with 20% down. probably going to get my third in a month or two. i dont see any type of correction happening around there.. and wtf is 10-15% decrease on these little houses that i’m cash flowing every month? i’ll be hanging on to them for 10-20 years. im 27 and i want to collect cash flowing properties in hamilton
—————————————————————–

Ha ha how dumb can you be? You’re taking on a half mil in debt to gain a few hundred bucks of taxable income a month. Go buy another 3 houses Mike.

#140 AprilNewwest on 03.08.13 at 1:11 pm
Corporations are not hiring because they don’t need to. For one thing automation is replacing people and many companies go where labour is cheaper. Corporations are swimming in cash.
——————————————————————

And how do you explain the 236,000 new jobs that were created in the U.S. during the month of February?

How does one go about finding “swamper” work? My brother-in-law works nights cleaning a shopping mall, plus doing upgrades to his house during the day, good guy, not a slacker, but his pay sucks. I’d like to see him get something better paying like the swampie work you mentioned, sounds like something he could do. Thanks Kip.

I just sent off a letter to a major privately owned food company in Canada with hundreds of outlets to change a few things with their suppliers in regards to one element in the production of product. I should charge for my services, but know I blew their minds with something unique to increase sales bigtime, and am expecting a reward, as the Board will have a meeting about this all. I want free food product for a year, so have my fingers crossed as they have hundreds of products.

US interest rates will not be allowed to rise and Doc Willie lists why:

“The consequences of rate hike in any exit strategy would be felt in the following ways:

a) Raise borrowing costs to finance the USGovt deficit, and possibly force those costs to rival the bulging endless war costs. A $700 to $800 billion borrowing cost line item might be considered low. Rate hikes are totally out of the question.

b) The USFed would torpedo their best clients that accepted low-cost loans according to the Dollar Swap Facility. The total bestowed upon European banks alone is well over $3 trillion from the ample supply in 2011, plus the recent huge round. The biggest Western banks would be ruined in a matter of a couple months. Rate hikes are absurd on their face.

c) The USEconomy would be forced to contend with higher consumer borrowing costs for cars, homes, boats, and more, while businesses would be dealing with higher borrowing costs for trucks, communications equipment, and machinery. Rate hikes are not even remotely likely.

d) The US Housing market would be forced to enter a recognized depression, instead of the false recovery. This market cannot recover effectively with sub-4% mortgage rates and subprime lending, courtesy of the USGovt agencies like the FHA. Rate hikes are not going to happen, period.

e) The big US banks would see their USTBond carry trade ruined. It is their primary source of profit, certainly not commercial lending or investment banking. The big US banks borrow at near 0% and invest in 2% or 3% long-dated USTBonds. Higher rates would force them to sell the long-term USTreasury Bonds, and thus exacerbate any exit strategy by the cornered USFed. Rate hikes would be blocked before they happen.

f) The interest rate derivatives would cause a nuclear event. The JPMorgan interest rate derivative collection is over $72 trillion in notional value. If Interest Rate Swap contracts have been keeping the long-term rates under 3% for two years in steroid driven activity in hidden rooms, then their unwind would cause the long-term USTBond yields to rise toward Greek levels, and far past Spanish and Italian levels. Thus the label of a nuclear event. Rate hikes would cause a decade of darkness.”

#167 Mixed Bag – know of some people that have contracts for shopping centers; offices; apartment buildings for cleaning services or other services, and they are all driving a Benz, as hire a crew that is bonded to do all. The trick is to acquire the contract for services rendered, and become a supervisor, and hire others to do the work.

“There are companies like “MS” and “JPM” trading below their tangible book value and you are looking at some stupid charts? Dude, wake up…”

Wake up to what? If the big swingin dicks on Wall Street say these banks trade at book value, then that’s where they belong. Why aren’t they up there with the rest of the markets? Why are you picking 2 investment banks? And what does that have to do with looking at “some stupid chart” If you would have looked at the double top forming in 2007 on the stupid chart, maybe you would have pulled out. I see the same happening right now, or within months. And the rise is on decling volume, always a bad sign. Dude

Kevin, if you haven’t told the wife yet, do so. There are steps you and her can take to minimize the financial stress, she probably already knows something is wrong, she will keep an ear out for any job opportunities, and you can still put the tie and suit on every day as you pound the pavement and work on enhancing your skills.

Rip the Band Aid off dude, and let the blogdogs know how things are going.

#141 Calgaryboomer — “I guess I do worry when I see the triple peak on the long term S&P chart, looks just like 2007, looks closer to a top than a great time to jump in.”

has to go higher at some point… or we are all completely f’d… Bernanke is going to win this fight… Remember, Indexes are point value creations… Inflation alone will make the point value go up… Zimbabwe had the best performing stock market by point value in the years it dealt with hyperinflation

@ #134
The real Kip
……………………………………………
I have been talking in recent years to those migrant workers. Just out of curiosity, I wanted to know about their lives, and why they are doing this.
They came from Mexico, Costa Rica, Guatemala and other south American countries.
This is what they told me: “It is easy money for us. We come here for six month to eight month. We do this for a couple of years, longer if we like it. We stay at a cheap motel; they are giving us special rates. There are usually four of us to a room, at $ 250.00 each a month, it’s affordable. We have a kitchenette, heating up canned food, or microwave. Keeps the food cost real cheap, we don’t need much. We don’t spend any other money because we are working long hours during those months. We often work on weekends too. So we are only in the motel to sleep.
We are sending all our money back home. In our country, our families live well on the money we make.
There is plenty left over each month, so we are saving this money and we can buy a decent home in just a couple of years. This is the best way to do it for us.
When we have our house, we might keep coming here, or other countries like the US, we can make enough money to save and live well in our countries, it is much cheaper to live there.”

So, there I had my answer.
They can do this, working at minimum wages and working long hours for several months out of the year.
They are getting ahead at minimum wage.
Living in Canada, a Canadian cannot live like this, especially when they have to live like this forever.
They will never get ahead; they will most likely not even get by.
And supporting a family or buying a house? Never!
Unless they move to Mexico.
Or South America, and only come here to work.
That is most likely the reason why Canadians cannot afford to pick cucumbers in this country!

The last excuse for leaving emergency rates at zero is leaving the station….I’m talking about rising wages and the real effect on inflation.

This should be interesting…since 1978 the pinheads in the legislature have used rising wage pressure as a way to keep inflation in line….it’s a fact wage growth vs productivity has been abysmal…but things are changing…….

there is so much speculation on real estate in Vegas these days that qualified workers cannot be found at present rates…..the spec builders are paying 15% more than they were five years ago and projects are taking months longer to complete….all will have to be added to the asking price……but will the units sell at the higher prices…thats the question…doesn’t matter…thats inflation in the works….and rising rates in the US will be lockstep in Nafta Land.

of course it’s all lies that real estate is improving….the story is just media trying to shore up Obama’s dismal performance…..but higher wages will be hard to take away…harder than taking away someones job….once the bar is set …..it’s set for good.

So…..heres the likely scenario…rising rates in a stagnant economy….just for the sake of trying to paint lipstick on a political pig.

F looks very worried.
There’s not much happening in the private sector. Where they pulled today’s job creation numbers from, I haven’t the foggiest idea.
But F. makes mention of revenue outlook and has a grim face. I get that. My company’s rev. outlook isn’t great either and this year is a write off.
They say next year is better. Really? How so? Because the US is improving? Really? Not from what I’m reading and hearing.

They can manipulate statistics as much as they want. The more they do it, the easier they are to discredit. Wizards need to be careful these days because people are paying attention and doing their own research. In the end though, our research and experience doesn’t matter squat.

When the wizards say that the sun is shining despite a torrential rain fall in Vancouver, then we ought to believe that the sun is shining.
Maybe they’ve always lied this much but I’m finding it more noticeable these days.

The indictment by the U.S. Attorney’s Office in Miami said that Osorio and his former Chief Financial Officer Craig Toll, also applied for and obtained a $10 million loan from the Overseas Private Investment Corporation (OPIC), a U.S. government agency.

The loan was intended to help build a manufacturing facility in Haiti and 500 homes for families in Haiti after a devastating earthquake in 2010 left about 250,000 people dead and more than one million homeless.

Prosecutors said Osorio “used the OPIC loan proceeds to repay investors and for his and his co-conspirators’ personal benefit and to further the fraud scheme.”
—————————-
In 1997, Ernst & Young awarded Osorio its “Entrepreneur of the Year” prize for his work at a previous company he owned, CHS Electronics. At the time, the company was one of the country’s leading electronics distributors. In 1999, CHS Electronics said it had settled a class action lawsuit brought by some shareholders. A year later the company was declared bankrupt.

CHS Electronicshttp://en.wikipedia.org/wiki/CHS_Electronics
^ [1] / “CHS Electronics (NYSE:CHS) a leading international distributor of computer products was today charged in a class action lawsuit with deliberately avoiding European Value Added Taxes (VAT) in order to fraudulently increase company profits and inflate the CHS”
=========

AK said:
And how do you explain the 236,000 new jobs that were created in the U.S. during the month of February?
————–
Table A-1. Employment status of the civilian population by sex and agehttp://www.bls.gov/news.release/empsit.t01.htm
see –
IN PRAISE OF POLITICAL DYSFUNCTION – New Economic …neweconomicperspectives.org
see –
posted by Frank | March 8, 2013 at 8:56 am
underestimates unemployment in that about 10 million people are involuntarily working part time.
=======

WIKIPEDIA: “The National Capital Region, also referred to as Canada’s Capital Region, is an official federal designation for the Canadian capital of Ottawa, Ontario, the neighbouring city of Gatineau, Quebec, and surrounding urban and rural communities.

The term National Capital Region is often used to describe the Ottawa-Gatineau metropolitan area.”

#163 AK – I wasn’t actually referring to the US but in any case do you know for a fact that all these new jobs are full-time and permanent? There’s always some hiring going on as not all jobs can be done by a machine or outsourced.

If a company health care company VP can become redundant, it shouldn`t be to difficult for IBM labs to create a virtual Central Banker.

” The Art of the Possible: Transforming Healthcare with IBM Watson”

“IBM has taken a major step forward with partners Memorial Sloan Kettering and WellPoint in putting IBM Watson to work in healthcare. On Friday, February 8th, the team unveiled the first commercially-developed Watson-based breakthroughs. These innovations have the potential to help transform the quality and speed of care — and the entire healthcare industry — through individualized evidence-based medicine.”

“ I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant”
― Alan Greenspan

Watching the American economic doomers and gloomers trying to explain their way out of the latest US job-stats information is instructive.

Most of us economic doomers on this side of the line were also digging deep today, and recently, to find out if the US really IS “getting better.”

Probably not as much as mainstream investor cheerleaders would like, according to Zero Hedge, Market Ticker, et al.

The increased number of jobs is leaning more and more into the part-time side of the economic ledger.

While better than nothing, a question arises: how can the generally low pay in primarily service industry work afford workers the chance to “get into real estate” as the most discussed example?

If the homes are cheap as dirt, probably OK.

But homes are getting more expensive, says the real estate industry.

Bolstering this apparent good news is the reappearance of NINJA loans. So, accommodations are being made for the poor to get even poorer, AGAIN! 2008 wasn’t THAT long ago.

Other critics of the so-called US economic recovery say another property bubble is already forming when the last big one still needs some further deflating.

All this, and mounting education and car debts are the legacies of Big Ben’s money priting handiwork in the US.

In Europe it is unending economic depression.

Here in Canada, the crap is hitting the fan on all fronts big-time, according to St. Garth of the Fully-Stocked Lifeboat Society. Central Banker Benny’s handiwork will come to full unpleasant view in Mr. F’s upcoming spring budget.

It should be a goosecooker for many in the public sector.

The rest of us will say, “about time.”

But the real victims will be all of us.

Keeping interest rates so low for so long has resulted in historic market distortions of such magnitude that there is no precedence.

Nobody is getting any fundmentally wealthier if the “values (pricies)” of these going-up-forever-stocks
are compared to the slithery moves of their undrlying sovereign currencies. In fact, compared to many commodities including oil and gold, in addition to currency moves, some stocks are going down not up.

It is still hard to reconcile buying stocks, most “good ones” of which have pricey PEs, when my instincts tell me that other market shoes need to drop, meanwhile.

So, if like most of us, you continue to play the investment game, at least invest in dividend payers. That is the least you can do for kith and kin.

As a kid – my parents always wanted to send me off to the farm to “get my hands dirty” and learn the value of working for a dollar – my great uncle refused – there is a ton of chemicals on the fruit and constant exposure was linked to many cancers.

My great uncle sadly died a few years back with liver cancer & lung cancer. What you see is not exactly what you get –

Those who live in the Niagara region are very careful of outdoor exposure during crop spraying time –

It may not be the lazy thing – but the fear of health problems.
————————————————–

It’s laziness on the part of canadians not “health concerns”. If they were so concerned then they wouldn’t go to IG and buy the fruit would they? Or perhaps they would do something to change the chemical contamination of our food.

You should be ashamed of yourself and your family for pumping food into the food chain that is contaminated with cancer causing chemicals. Especially as your family clearly understand the risks.

And you have the gall to say they were the “best apples and pears you’ve ever seen”.

I just sent off a letter to a major privately owned food company in Canada with hundreds of outlets to change a few things with their suppliers in regards to one element in the production of product. I should charge for my services, but know I blew their minds with something unique to increase sales bigtime, and am expecting a reward, as the Board will have a meeting about this all. I want free food product for a year, so have my fingers crossed as they have hundreds of products.

Thanks Kip! That’s kind of you to reply. We drove to the Liuna office a few years ago, 2009 or 2010 maybe, and they weren’t taking applications at the time. We’ll try again.

#174 Old Man on 03.08.13 at 3:24 pm

Yes, we’ve picked up on that. I’m not sure about the bonding requirements, I doubt he’s bonded. He started that job as a “bridge job” to cover expenses, and has just gotten stuck in a rut. I’ve suggested he consider getting into plumbing, but frankly, he’s not sure what he wants to do. He’s in his early 40’s and thinks it’s too late to re-learn, but geez, he’s got another twenty years of work ahead of him.

#37 Sockeyemoon
National rental vacancy rates is 3% (from HRSDC website), potential buyers hold off buying. How does rent go down?
People move here and there, Canada has an increase of population every year in the foreseeable future. It’s less places to rent for an average rental price.

WOW!! What a Deal! It `boasts` (my favorite RE word) a famous school zone! YAY!!!! I wonder if it came with the standard stainless, granite, and potlights so many chicks dig. Now the wifey can really boast! And all for the low, low price of $921k!!
That is over 5 grand a month in just mortgage payments and a lot of interest..for 3 bedrooms, 2 bathrooms, and 1600 sq feet…and nowhere to add on to if you need the extra space. It IS different here.
This makes me sick I can`t write anymore.

I want to talk about the state of the economy in Canada, as now have it figured out, as Friday is a bad day to shop, and Saturday and Sunday can become a nightmare, and was out of cash and food today, so was expecting a bad time, but nobody was around. I mean wtf is going on?

Ok most people have huge bills to pay on the first of the month, just like me, so they are waiting for some money, and are broke, but have cash. Now the rest of the month is open season, so am learning the buying patterns with this all to survive the no parking for me, as Friday, Saturday, and Sunday for the rest on the month can become a nightmare.

Yep, think I have this all, whereby, I can bank and go shopping with no problem for me, as there are buying patterns in society that one needs to pay attention to, and call it a vector of cashflow within society, as see a pattern that will avoid from now on, as love the path of least resistance to get things done.

#190 AprilNewwest on 03.08.13 at 5:15 pm
I wasn’t actually referring to the US but in any case do you know for a fact that all these new jobs are full-time and permanent?
——————————————————————-
According to this report they were all permanent.

#195 never heard of this company in my life, and #196 any company that deals with the public for a contract of cleaning with a corporation must have all employees bonded, and there is NO exceptions, and all banks use this service, and this is big money when all is said and done.

“I’ll tell you one thing, if things keep going the way they are, it’s going to be impossible to buy a week’s groceries for $20.”

“Have you seen the new cars coming out next year? It won’t be long before $5,000 will only buy a used one.”

“If cigarettes keep going up in price, I’m going to quit. A quarter a pack is ridiculous.”

“Did you hear the post office is thinking about charging a dime just to mail a letter?”

“If they raise the minimum wage to $1, nobody will be able to hire outside help at the store.”

“When I first started driving, who would have thought gas would someday cost 29 cents a gallon. Guess we’d be better off leaving the car in the garage.”

“Kids today are impossible. Those duck tail hair cuts make it impossible to stay groomed. Next thing you know, boys will be wearing their hair as long as the girls.”

“I’m afraid to send my kids to the movies any more. Ever since they let Clark Gable get by with saying “damn” in “Gone With The Wind,” it seems every new movie has either “hell” or “damn” in it.

“I read the other day where some scientist thinks it’s possible to put a man on the moon by the end of the of the century. They even have some fellows they call astronauts preparing for it
down in Texas.”

“Did you see where some baseball player just signed a contract for $75,000 a year just to play ball? It wouldn’t surprise me if someday they’ll be making more than the president.”

“I never thought I’d see the day all our kitchen appliances would be electric. They are even making electric typewriters now.”

“It’s too bad things are so tough nowadays. I see where a few married women are having to work to make ends meet.”

“It won’t be long before young couples are going to have to hire someone to watch their kids so they can both work.”

“Marriage doesn’t mean a thing any more; those Hollywood stars seem to be getting divorced at the drop of a hat.”

“I’m just afraid the Volkswagen car is going to open the door to a whole lot of foreign business.”

“Thank goodness I won’t live to see the day when the Government takes half our income in taxes. I sometimes wonder if we are electing the best people to government.”

“The drive-in restaurant is convenient in nice weather, but I seriously doubt they will ever catch on.”

“There is no sense going to Lincoln or Omaha anymore for a weekend. It costs nearly $15 a night to stay in a hotel.”

“No one can afford to be sick any more; $35 a day in the hospital is too rich for my blood.”

“In ancient times, cats were worshiped as gods; they have not forgotten this.” — Terry Pratchett
—“What a dismal blog this is today. Fear is back. — Garth” — Fear not to worry. I have learnt of an obscure, unproven consp. tinfoil roasted canary in the coalmine theory concerning . . .

Shapeshifters. Imagine the devastatingly real possibility that Justin Ford and Rob Bieber can, in fact, switch bodies at swill? Could it be that they are Laurl and Hardy visiting us from another dimension?
—
#65 Soylent Green is People — That and Waking Ned Devine were two great movies from the ’90s, really enjoyed the subtle humor in them!

#134 The real Kip — “Is Kevin qualified to pick a cucumber?” — I had long been under the impression that Kevin was a lemon cucumber, so how could he pick himself?

#197 Mike in Surrey on 03.08.13 at 6:14 pm ” How does rent go down ?”
I reckon the rents goes down when the ” underwater, desperate to hold on to their spec condo type folks” rent them out. I think it is well under way.
being in the renting apartments biz I can safely say they are taking way longer to rent out now. 6 weeks on average.
two years ago there was a line up of people who had impeccable credit for a bachelor on the north side facing the parking lot [a tough one to rent]….it became vacant in november last and wasnt rented until jan 15 2013. quite a bit of a change for us.[we are in kits between yew and vine just north of broadway]
now every other potential renter or so fails the credit check. and we seem to have a lot of competition for those few folks all of a sudden.
we reckon thats because darn near every one who could buy a place ,has. and some bought two….
we think a lot of those folks took our custom.
we also think that we may, in the foreseeable future, have to freeze or lower our rents. not there yet but we dont like what we see.

job tsar steps down
The company is chaired by Emma Harrison, who was appointed by the prime minister, David Cameron, in 2010 to help get troubled families into work….Its five shareholders were paid £11m in dividends last year, of which Harrison received 87%.(she holds the shares)

That’s not enough doom and gloom, don’t forget to add into the equation the $100’s of trillions of derivatives that just keep growing which are completely unregulated and don’t show up on financial reports.

Example? ATB lost $1billion a few years back and spent 4 years of their profit paying it off.

Now ATB wants and additional $500 per account minimum increase by April 1st, with 1million accounts in Alberta and a miniscule reserve requirement, the gov in effect just gave themselves another half $billion (of your money if you are dumb enough to keep and account with them).

http://www.cnsbusiness.com/content/cima-finally-pulls-hsbc-mexico-license
..”The Senate report, which included a detailed investigation into HSBX and its Cayman Islands accounts, found they had operated for years with lax anti-money laundering (AML) and Know Your Customer (KYC) controls and information. An estimated 15% of the accounts had no KYC information at all, which, the report stated, meant that HBMX had no idea who was behind them, while other accounts were, in the words of one HBMX compliance officer, misused by “organized crime”…

Hmmm. So your putting $122,000 down to gross about 1,000 a month? But you’ve closing fees, yearly maintenance costs and taxes to deduct from all of that, not to mention headaches and possible missed rents.

Now if you were to invest that $122,000 with an 8% return based on Garth’s advice, you’d be making roughly $9,760 a year in interest, or about $813 a month – with no headaches, closing costs, selling fees, maintenance costs, skirmishes with tenants or possible missed rents.
Plus, you’d get dividend tax credits.

Not to mention the fact that 27 years is irrelevant if it is going to take almost that long for the house to pay itself off. For a rental to be profitable, it should be paid off in a short period of time, like 10 to 15 years, max. If not, the payoff probably won’t be great enough for the risk.

It’s called the numbers are fudged due to speculation; condo speculation in particular. Garth did post on the absence of proper divulgation of shadow property.

But then there’s also the issue of downsizing. If people can’t afford their big homes and can’t sell them, they’ll have to downsize and rent them out.

Of course, many own more than one property (may have a condo in the city, a home in the burbs and a cottage. When retirement funds are needed, they’ll sell, and if they can’t offload by selling, they’ll rent the extra units out, bringing new supply to the market.

Garth’s Twitter Posts

The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.